TOKYO -- The rapid spread of electric vehicles may cause demand for crude oil to start declining sooner than expected and possibly peak as early as 2025, experts said Tuesday at a commodities conference.
"I think [peak demand for oil will come] maybe before 2030... but now, when I talk to [people from the China National Petroleum Company], they say we will move to more gas to replace coal and oil, so peak could be 2025," Nobuo Tanaka, former executive director of the International Energy Agency and present chairman of the Sasakawa Peace Foundation, said at the Financial Times Commodities Tokyo Summit. "If China is at least like that, I think peak demand happens much much faster."
But "even with the peak demand coming earlier, the demand of oil is still very big," he continued, "so we have to continue to invest in oil development."
Electrification is "an unavoidable trend," Toyota Motor's head of environmental technology planning, Hiroyuki Fukui, said in a discussion about society's shift away from carbon. But "in the short term, we will continue making existing internal combustion engines more efficient," he continued. "At this stage, releasing electric vehicles as they are does not bring profit."
Some disagreed over how early crude oil demand would peak. "When oil demands start to suffer oil prices will fall, that will suddenly make petroleum economic, and if it is still available, not outlawed, I think it will create a lot of incentive for people to go back to that," said Vikas Dwivedi of Macquarie Group.
Sumitomo Corp. Global Research President Hiroyuki Takai likewise took a sunnier view. "I think we will need oil, maybe more oil because more vehicles and more people in developing countries," Takai said.
Prices of cobalt, used in electric-vehicle batteries, have roughly doubled from the start of the year as supply and demand tighten. "A car maker will be looking to secure maybe 7 years worth of raw materials to continue support and launch EVs," said Tony Southgate of Eurasian Resources Group.
Electric vehicles run on electrical power rather than fossil fuels. Demand for power produced at coal-burning plants will likely continue to climb in emerging Asian economies even if Europe moves away from the carbon-emitting energy source, predicts Akira Yabumoto, director of energy planning at power wholesaler Electric Power Development. "We've accumulated experience with more efficient coal-fired thermal power, and we plan to make use of it," Yabumoto said.